Sin t

1
GFNORTE
2Q03 Results
2
Banorte went from a regional to a national bank
improving its market share
BRANCHES AND EMPLOYEES
Dec 01
Dec 96
Jun 03
Banorte
BTE BCR
14
6
4
4
156
455
1,182
1,053
Branches MS
2.3
6.4
16.6
15.5
7
32
32
32
States
4,840
13,009
8,516
15,099
Bank Emp
BANORTE BANCENTRO BANPAÍS BANCRECER
Dec 01
MARKET SHARE ()
Dec 96
Jun 03
BTE
BTE BCR
5
5
5
4
6.8
11.4
15.4
16.4
Non Interest Deposits
14
5
4
5
3.0
7.8
11.7
11.5
Total Deposit
10
6
4
4
3.3
7.0
8.6
11.1
Traditional Loans
10
3
3
3
3.3
9.4
15.6
16.5
Total Loans
DEPOSITS EXCLUDES FINANCIAL INTERMEDIARIES AND
INCLUDES MUTUAL FUNDS AND SOURCE ABM LOANS
INCLUDES FOBAPROA, IPAB CREDIT AND SOURCE DEC
96 CNBV DEC 01 AND JUN 03 A.B.M.
3
The client base and the distribution channels
have experienced an important growth
CLIENTS (Thousands)
4,692
4,678
4,634
TRANSACTIONS PER DISTRIBUTION CHANNEL June 2003
2,818
2,324
1,900
889
627
ATM
50
96
97
98
99
00
01
02
June03
BRANCHES
28
DISTRIBUTION CHANNELS
PC Banking 21,101
PC BANKING INTERNET
12
POS 10,250
Call Center 10.1
TELEPHONE BANKING
6
ATM 2,490
POS
4
Branches 1,059
8.3
2,458
990
212
157
96
97
98
99
00
01
02
Jun03
CLIENTS INCLUDES THE BANKING SECTOR AND THE
BROKERAGE HOUSE. TRADITIONAL AND INTERNET.
MILLIONS OF PHONE CALLS FOR THE PERIOD.
4
Banorte has achieved both growth and excellent
perfomance through time
29.50
SHARE PRICE
10.50
31.4
21.0
17.6
ROE
7.54
28 DAYS CETE RATE
1,628
1,273
929
Extraordinary Income
EXTRAORDINARY INCOME 1997 PS 777, 1998 PS 472
AND 2002 PS 417. MILLIONS AS OF JUNE
2003. DURING 2000 WE HAD A EXTRAORDINARY INCOME
OF PS 239 MILLION FROM THE RECOVERY BANKING UNIT
5
GFNortes Objectives Strategy

• Objectives
• Provide excellence in financial services
• Maximize shareholder value

• Strategy
• We have succeeded in building a national
  franchise through selective acquisitions. We will
  now focus on exploiting our leading market
  position by
• Improving our funding mix
• Increasing Non Interest Income
• Reducing Non Interest Expense, improving our
  efficiency ratio
• Aggressively growing our credit portfolio, with
  strict credit risk policies
• Further developing our asset recovery business
• Multi-channel approach with a cross-sell focus

6
GFNorte Results
HIGHLIGHTS
(MILLIONS OF PESOS)
GFNORTE Net Income Net Income (Excluding
Generali) Annualized ROE Annualized ROE
(Excluding Generali) EPS Book Value
BANKING SECTOR Net Income w/o Afore Recovery
Banking Business Contribution Capitalization
Ratio Traditional loan portfolio annual
growth Past due loan ratio Reserve Coverage
1H03
1H02
1,199 799 23.4 15.6 2.39 21.73 1,034 37 13.1
62.3 3.4 117.2
1,045 17.6 2.08 24.80 819 14 13.6 41.2 2.
6 116.0
EPS BOOK VALUE ARE PESOS PER SHARE . BOOK VALUE
EXCLUDES MINORITY HOLDINGS.
7
Profit composition
NET INCOME
2002
1H03
2001
BANKING
Ps 819
78
84
85
141
LONG TERM SAVINGS
14
8
6
42
AUXILIARY ORGANIZATIONS
4
4
4
32
BROKERAGE
3
4
2
10
HOLDING
1
0
3
Ps 1,045
GFNORTE
100
100
100
MILLION PESOS
8
Net Interest Margin
8.21
7.54
8.07
6.95
4.8
4.6
1H03
1H02
Average 28 days TIIE
Net Interest Margin
Average 28 days Cete Rate

• NIM decreased due to
• The 45 bp reduction in the differential between
  the average 28-day Cete rate and the 28-day TIIE
  rate, which is the reference for a large part of
  the loan portfolio.

9
Cete vs. NIM
9.3
9.1
9.0
8.6
8.1
7.9
7.5
7.5
7.3
6.8
7.0
6.9
6.8
6.8
6.7
6.7
5.11
5.3
4.9
5.1
5.0
4.9
4.7
4.7
4.5
4.3
27-dec
31-jan
28-feb
27-mar
25-apr
30-may
27-jun
25-jul
29-aug
26-sep
31-oct
28-nov
26-dec
30-jan
24-feb
25-mar
28-apr
29-may
26-jun
2003
2002
2001
Net Interest Margin (NIM)
28 days Cetes Rate
SOURCE BANCO DE MÉXICO. CETE 28 DAYS CETE
RATES
10
Non Interest Income
1,727
1,630
1H03
1H02
1H03 vs 1H02
Service
1
959
954
(62)
Recovery
182
478
194
Trading
586
199
6
TOTAL
1,727
1,630
MILLION PESOS
11
Service Fees
1H03 vs 1H02
1H02
1H03
Fund Transfers
95
86
(9)
Account Management Fees
336
311
(7)
Fiduciary
90
85
(6)
Credit Card
281
303
8
Electronic Banking
124
120
(3)
Other Fees Net
28
54
93
NET FEES - SERVICES
954
959
1

• The accumulated Service Fee Income increase by 1
  vs 1H02 because of a 8 jump in Credit Card fees,
  although some areas showed lower income because
  clients have become more efficient in the use of
  banking services as a result of the new charges
  and increases in service fees established in
  1H02.

MILLION PESOS
12
Recovery Fees
1H03 vs 1H02
1H02
1H03
I.- LOAN PORTFOLIOS ACQUIRED
275
103
206
87
a. Serfin Loans (1)
345
201
Income
139
114
- Expense
69
16
b. Other Portfolios (2)
Income
176
85
- Expense
107
69
II.- FOBAPROA FEES
203
80
478
182
(62)
NET FEES RECOVERY

• The drop in the Fobaproa Fees is due largely to
  the fact that portfolio administration fees were
  no longer charged since the agreement expired in
  Dec 102. Last June, this agreement was
  renegotiated and the fees are expected to
  increase as of 3Q03 by Ps 104 million retroactive
  positive effect. Serfins collection rights are
  also about to be renegotiated generating expected
  Ps 118 million by 4Q03.

MILLION PESOS
(1) COLLECTION RIGHTS (2) 9 PACKAGES.
13
Recovery Banking Business
2Q02
2Q03
MANAGED ASSETS
1. Proprietary loans
3,385
5,549
(1)
1,296
1,228
2. Repossesed assets
40,954
44,938
3. Fobaproa - IPAB
4. Acquired loan portfolios
12,024
11,196
Banorte Risk 12
57,659
62,911
NET INCOME
1H02
1H03
Traditional Bank
451
765
Recovery Bank
259
128
BANKING SECTOR
710
893
(2)
Recovery Bank Contribution
14
37

• MILLION PESOS
• ASSETS MANAGED BY SOLIDA ADMINISTRADORA DE
  PORTAFOLIOS
• INCLUDES LOANS SOLD TO SOLIDA FOR PS 1.9 BILLION
  AT 1Q03.
• EXCLUDES PS 416.7 MILLIONS OF A EXTRAORDINARY
  INCOME FROM GENERALI.

14
Non Interest Expense
- 17
- 3
4,562
Other
14
4,423
VAT IPAB
13
14
15
25
OAE
24
Personnel
48
47
1H02
1H03

• The accumulated Non Interest Expense for the
  first half dropped 3.0 vs. 1H02, with reductions
  of 4.8 in Personnel Expenses and 8.7 in
  Administration and Promotion Expenses as a result
  of the efforts targeted to controlling and
  reducing Operating Expenses.

MILLION PESOS. () FOURTH QUARTER 2001
PROFORMA FOR BANCRECER VAT VALUE ADDED TAX
OAE OPERATION AND ADMINISTRATIVE EXPENSES
INCLUDING IT.
15
Efficiency Ratio
1992
1996
1997
2001
Dec 2002
2Q03
Efficiency Ratio
55
66
93
78
105
78
87
76

• Efficiency ratio has suffered after each
  acquisition, being able Banorte to return to
  adecuate efficiency levels in the following
  years.
• After the acquisition of Bancrecer the efficiency
  ratio went up to 87, returning it down to an
  average of 76 by 2Q03.

EFFICIENCY RATIO INCLUDES TRADING
16
Expense and Income
2001
2002
Acum Jun '03
BBVA- Bancomer
Average G6
BBVA- Bancomer
Average G6
BBVA- Bancomer
Average G6
Banorte
Banorte
Banorte
Expense
10,438


18,545


67,109


9,197


16,931


71,068


4,606


8,259


34,659

Income
12,005


28,558


103,789


11,401


28,229


106,514


6,114

14,729

60,654

of Branches
1,182
1,752
7,074
1,063
1,663
6,768
1,053
1,642
6,716
Expense per Branch
8.8
10.6
9.5
8.7
10.2
10.5
8.7
10.1
10.3
Income per Branch
10.2
16.3
14.7
10.7
17.0
15.7
11.6
17.9
18.1
2003 Annualized
2002
Acum Jun. '03
BTE
BCR
BTE
BCR
BTE
BCR
Direct Expense x Branch
5.0
2.0
2.7

1.2

5.4

2.4

Total Income x Branch
12.0
4.1
7.2

2.6

14.4

5.2


Direct Contribution
7.0
2.1
4.5
1.4
9.1

2.8

30
33
Annual Growth
MILLION PESOS. BANORTE INCLUDES SÓLIDA AND IS
BANKING SECTOR. OTHER BANKS ARE WITH SUBSIDIARIES
AND UDIS. DIRECT CONTRIBUTION DOES NOT INCLUDES
LOAN LOSS RESERVES
17
Traditional Loan Portfolio
61,542
57,469
43,581
2Q02
2Q03
1Q03
2Q03 vs 2Q02

2Q02
1Q03
2Q03
TRADITIONAL LOAN PORTFOLIO
Commercial
14,875
17,150
18,444
30
24
Corporate
10,112
13,125
13,554
22
34
Mortgage
9,632
10,979
11,704
19
22
Automobile
2,343
3,518
4,016
7
71
Credit Card
1,259
1,836
2,153
3
71
Electronic Payroll Loans
389
641
810
1
108
Government Entities
3,682
6,654
7,552
13
105
Financial Entities
1,288
3,566
3,309
5
157
TOTAL
43,581
57,469
61,542
100
41
FIGURES MILLION PESOS. PS THOUSAND MILLION
PESOS TRADITIONAL LOAN PORTFOLIO DOES NOT INCLUDE
NEITHER FOBAPROA / IPAB NOTES NOR RECOVERY BANK
BUSINESS GOVERNMENT ENTITIES INCLUDES FEDERAL,
STATE MUNICIPALITIES
18
Quarterly Loan Insurance placement
MORTGAGE
1,867
1,737
1,677
1,489
1,398
65
1,004
96
90
81
79
100
35
19
21
10
4
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
CAR INSURANCE
LIFE INSURANCE
34,930
20,753
19,402
17,565
29,872
17,127
16,678
15,977
56
63
60
58
18,518
77
75
74
75
17,158
16,530
13,626
63
100
100
100
44
37
40
42
25
26
37
25
23
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
BANCRECER
BANORTE
NUMBER OF LOANS POLICIES ARE ACCUMULATED DURING
THE QUARTER
19
Fobaproa - IPAB
After Banortes expansion strategy, the
proportion of Fobaproa / IPAB notes has been
reducing since Traditional Loan portfolio started
to rise
Traditional Loans
155
150
Fobaproa / IPAB Notes
Ps 6.5 (1)
145
Ps 1.9 (2)
100
41
66
59
57
71
21
1996
1997
2001
2002
2Q 03

• BILLION PESOS AS OF JUNE 2003. NET OF FOBAPROA
  CHECKING ACCOUNT AND LOSS SHARING PROVISIONS.
• SHORT TERM LOANS TO SOCIEDAD HIPOTECARIA FEDERAL.
• SALE OF LOANS TO SOLIDA ADMINISTRADORA DE
  PORTAFOLIOS.

20
Industry Growth
Twelve month Traditional Loan Portfolio growth
() (Excludes Fobaproa / IPAB)
41 (1)
21
8
-1
- 2
SERFIN
SCOTIA INVERLAT
BANORTE
BANAMEX
BANCOMER
SANTANDER
-47
BITAL
() FROM 2Q02 TO 2Q03. SOURCE 2Q03 QUARTERLY
REPORTS, EXCEPT BANAMEX. (1) Excludes loans
managed by the Recovery Banking unit.
21
Loan Loss Provisions
127
117
116
5,699
4,502
4,350
2Q02
2Q03
1Q03

• Reserve Coverage decreased in 2Q03 due to two
  corporate loans that became non performing in the
  period. Steps are being taken to solve this
  situation in the short term.

MILLION PESOS The two corporate loans that became
non performing in the period were Mexlub with Ps
247 million and Propasa with 351 million.
22
Banortes Loan mix is shifting away from the
Monterrey region
and concentrating more in Mexico City
Dec01 Jun03 Loans 39 31 Branches
16 16
MONTERREY
Dec01 Jun03 Loans 13 11 Branches 14
13
NORTHEAST
Dec01 Jun03 Loans 6 10 Branches 16
16
NORTHWEST
Dec01 Jun03 Loans 27 29 Branches 22
23
MEXICO CITY
Dec01 Jun03 Loans 11 11 Branches 15
16
WEST
Dec01 Jun03 Loans 4 8 Branches 16
16
SOUTHEAST
Dec01 Jun03 100 100
NATIONAL
SOURCE ABM. 2001 DOES NOT INCLUDE BANCRECER
FOR LOAN DISTRIBUTION. LOANS EXCLUDES IPAB AND
FOBAPROA AND CENTRALIZED OPERATIONS.
23
Comparatives to the Industry 2Q03
ASSETS
NUMBER OF BRANCHES
29.1
28.0
24.4
20.9
19.7
13.8
15.7
13.2
13.7
4
4
2
10.5
5.6
5.4
Banamex
Banorte
Bital
Santander- Serfin
Scotiabank
Banamex
Banorte
Bital
Santander- Serfin
BBVA- Bancomer
Scotiabank
BBVA- Bancomer
ROE Group
CAPITALIZATION RATIO Rules 2003
33.6
16.2
15.2
14.5
21.0
18.4(1)
13.6
17.6
13.6
13.3
16.8(1)
4
4
13.3
Santander- Serfin
GFNorte
Bital
Scotiabank
BBVA- Bancomer
Banamex
BBVA - Bancomer
Bital
Santander- Serfin
Banorte
Banamex
Scotiabank
SOURCE OF ASSETS AND NUMBER OF BRANCHES
ABM SOURCE OF ROE AND CAPITALIZATION RATIO PRESS
RELEASE OF EACH BANK. INCLUDES MARKET AND CREDIT
RISKS. RULES 2003. (1) CALCULATED FOR BANKING
SECTOR
24
TENDENCY OF IPC, GFNORTE, GFB (Monthly)
JAN 02 SEPTEMBER 5th 03
IPC
12
GFNORTE
47
GFB
(6)
25
Dividend Policy

• In the Stockholders Ordinary General Assembly
  held on April 29th, 2003 it was approved a
  dividend policy of a minimum of 15 payout ratio
  on the recurrent net income of GFNorte, as long
  as there is no legal hinder and market conditions
  and the Group financial situation allow it.

26
Macroeconomic Environment
Budget 2003
Revised 2003
2001
2002
GDP
(0.3)
0.9
3.0
1.8
Inflation
4.4
5.7
4.3
3.5
28 days Cetes rate (end of the year)
6.8
6.9
7.8
5.8
28 days Cetes rate (average)
11.3
7.1
8.0
6.4
Peso exchange rate (end of the year)
9.14
10.31
10.60
10.80
SOURCE BANORTES BROKERAGE HOUSE
BUDGET GOALS FOR 2003

• 3 - 5 year Planning Process by 2H03
• ROE 17
• Loan growth 15
• Deposit growth 6
• Net income per share 4.30 pesos/share
• Estimated Dividend Payment by October 2003

27
GFNORTE
2Q03 Results